ATHENS — With three international bailouts of 326 billion euros ($380.87 billion) expiring on Aug. 20, not even a recent relief deal likely will be enough to keep Greece’s still-soaring debt from being able to repaid despite Prime Minister and Radical Left SYRIZA leader Alexis Tsipras’ boast he’s bringing recovery from an eight-year crisis.
He didn’t mention that, if so, it’s largely because he reneged on anti-austerity promises and buried Greeks under an avalanche of new taxes, higher taxes, pension cuts while backing off his vow to “crush the oligarchy” and rein in tax cheats.
That was part of the cost of seeking and accepting a third rescue package in the summer of 2015, this one for 86 billion euros ($100.47 billion) that came with more crushing conditioners for workers, pensioners and the poor while politicians, the rich, tax cheats, the tax-free shipping tycoons and Parliament workers were exempt.
That came from the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) but the Washington, D.C.-based International Monetary Fund (IMF,) which took part in two first bailouts of 240 billion euros ($280.39 billion), said it’s not clear whether Greece’s public load debt will be sustainable despite being given a longer time to repay.
Tsipras’ claim there would be a “clean exit,” after the bailouts end, leaving Greece to the mercy of the markets, was shot down by the creditors who said Greece’s economy will need monitoring for year to make sure there’s no backsliding on reforms and fiscal targets are hit.
An IMF report recommended a reduction in high direct taxes, which were imposed to right the country’s public finances but also constrain growth.
The economy is expected to grow 2 percent this year and 2.4 percent in 2019 but will slow to 1.2 percent in 2022. In the long term, the IMF report said, population aging will further hinder economic activity.
The IMF, which contributed to Greece’s bailout loans, said the Troika agreement to ease loan repayment terms ensures medium-term sustainability for the debt, while their further pledge to provide, if needed, additional future debt relief is “very significant and welcome.”
“Longer-term (debt sustainability) prospects remain uncertain,” said Peter Dohlman, the IMF mission chief for Greece.
Greece’s debt is expected to fall from a staggering 188 percent of annual output this year to just below 140 percent by 2037 but after that the debt-to-output ratio will begin to rise.
The IMF report also highlighted Greece’s high unemployment rate, currently around 20 percent and expected to decline to 14.1 percent in 2023, and called for action to boost public administration and further reform product and labor markets.
(Material from the Associated Press was used in this report)